ATCHISON, KAS. — Efforts to implement a long-term strategic plan are yielding positive returns for MGP Ingredients, Inc. Net income at the Atchison-based supplier of specialty wheat proteins and starches in the first quarter ended March 31 totaled $7,042,000, equal to 41c per share on the common stock, up 41% from $4,998,000, or 28c per share, in the same period a year ago.
Net sales during the period fell, though, decreasing 4% to $76,835,000 from $80,413,000.
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| Gus Griffin, president and c.e.o. of MGPI |
“We are very pleased with the results for the quarter and our continued progress in implementing our long-term strategic plan,” said Gus Griffin, president and chief executive officer of MGPI. “The increase in our operating income is evidence of that progress. While net sales declined due to softness in some of our lowest margin products, our focus on our highest margin products drove a significant increase in gross profit.”
Gross profit in the company’s Ingredient Solutions segment increased to $2.2 million from $1.9 million a year ago, reflecting a continuing sales mix shift to higher margin specialty products, higher selling prices and lower input costs. Net sales for the segment fell 11% to $13 million.
“While net sales for our Ingredients Solutions segment were down, with exports hindered by the strong U.S. dollar, strong growth in our specialty protein products supported improved segment gross profit,” Mr. Griffin said. “We continued to be encouraged by our progress in positioning this segment to benefit from long-term consumer trends.”
MGPI said its 2016 net sales percentage growth projection has been revised downward to the mid-single digits, reflecting the impact that the first-quarter sales decline of lower margin products has on the full year. Meanwhile, 2016 gross margin gains are expected to be moderate following strong 2015 improvement, and operating income is expected to increase by a compound annual growth rate in the 10% to 15% range over the next three years.
